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Congestion pricing February 16, 2007

Posted by Sharath Rao in America, economics, technology.

An informative article on the idea of congestional pricing – something I wrote about a few weeks ago. Most interesting part :

“Everyone accepts that if your car is stationary, it’s fine to pay for parking,” said Alexander Tabarrok, professor of economics at George Mason University. “But if you tell people they have to pay to move their car between two points, they think it’s crazy.”

True, isn’t it. Counter-intuitive infact. If someone had made the other argument – Why should I pay when my car is parked, I would rather pay if I were moving it around – that would have sounded more reasonable. Ofcourse, there are fuel costs when you move it around, but fuel is something that is between you and the car ( and the environment ). Congestion is between you and the road. ( Uhm, am I making it sound like road is some living, walking entity !)

Ofcourse you pay road taxes, but they are regressive – different people use public roads to different extents, then why pay the same taxes – and hence should be limited. Congestion is based on a simple idea from economics – you have to pay to use a scarce resource and the scarcer the resource, the more you pay. The pity is that we all understand this and its an idea that has been internalized over centuries of trade and organized societies – but the moment its used as a systematic tool in policy making, there is talk of class exploitation.

The other interesting part :

The greater willingness of drivers and policy makers to consider congestion pricing is a recognition that building more roads will never be a solution to traffic problems.

No, not a lesson for the developing world. Just because there should be and generally are soft upper limits on how many roads one can have, does not mean the limit is 0.


As the law of unintended consequences may have it, this man was probably responsible for increased TV sales, increased divorces and sibling rivalry. R.I.P.



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